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Why Lithium Americas Stock Just Spiked 13%

By Rich Smith – Nov 19, 2021 at 1:56PM

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You can thank JP Morgan for the spike.

What happened

Around 7 a.m. ET this morning, analysts at investment bank JP Morgan revised their price target on Lithium Americas Corp (LAC 14.73%) stock higher -- to $39 per share.

By 1:20 p.m. ET this afternoon, Lithium Americas' mining stock had just about proved JP Morgan correct as its stock price leapt 13.2% to approach $38 -- better than a $4 price spike in just a few hours' time.

Arrow angles up on a green stock chart.

Image source: Getty Images.

So what

Now, JP Morgan's note (covered today on wasn't the only reason why Lithium Americas stock spiked, but it was definitely a contributing factor. As the banker explained, the price of lithium metal for electric-car batteries is going up, with pricing on both spodumene (a lithium-containing rock) and lithium carbonate (a lithium salt) continuing to move higher.

As Lithium Americas' stock-in-trade is getting more valuable, it only makes sense that Lithium Americas stock, too, would rise.

Now what

At the same time as this is going on, moreover, the U.S. House of Representatives just passed President Biden's "Build Back Better" infrastructure plan -- the one that contains a staggering $555 billion in funding to support renewable energy companies and that constitutes "the largest effort in U.S. history to combat climate change," as CNBC reported this morning.  

It makes sense, too, that investors would be excited about the prospects for this infrastructure bill's passage, especially because the bulk of the support contained in the bill comes in the form of "tax incentives for low-emissions energy sources" such as solar and wind power. The energy from these sources is generally stored in the form of -- you guessed it -- rechargeable lithium batteries!

Granted, it remains to be seen how much of this funding will survive a later Senate vote on the bill -- or whether the bill will pass at all in the Senate. For now, though, investors in Lithium Americas stock seem happy to just take the win, enjoy the moment -- and think about the risk that this the bill will fail some other day.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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